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In line with the government’s thrust on ‘Make in India,’ the Union Budget made some key changes to address the duty anomalies that made importing of goods cheaper than manufacturing them locally. The proposal announced will give 11.5 per cent duty advantage to mobile phone, if manufactured in India and 10.5 per cent to tablets.
There will be a boost for manufacture of Solar cells, LCD/LED TVs, Pace makers, microwave ovens, optical fibre cables, endoscopes-medical electronics among others. It has also been mooted to make it easier to invite investment for electronic companies. Pass through status for Category I and II funds has been approved which will help daughter Funds of Electronic Development Fund.
“The role of indirect taxes is also very important in the context of promotion of domestic manufacturing and Make in India,” finance minister Arun Jaitley said in the Parliament on Saturday. In indirect taxes, rates of basic customs duty on certain inputs, raw materials, intermediates and components (in all 22 items) have been reduced so as to minimise the impact of “duty inversion” and reduce the manufacturing cost in several sectors. Some other changes address the problem of CENVAT credit accumulation due to the levy of SAD. All goods, except populated printed circuit boards for use in manufacture of ITA bound items have been fully exempted from SAD and it has been reduced on imports of certain other inputs and raw materials.
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“Great budget for electronics. Big boost for mobile phone and tablet manufacturing,” tweeted Ajay Kumar, joint secretary in the department of electronics and information technology.
Below is the fine print of change in duties for the electronics sector:
The National Optical Fibre Network
Programme (NOFNP) of 7.5 lakh kms. networking 2.5 lakh villages is being further speeded up by allowing willing States to undertake its execution, onreimbursement of cost as determined by Department of Telecommunications.Andhra Pradesh is the first State to have opted for this manner of implementation.
Reduction in Basic Customs Duty to reduce the cost of raw materials:
*HDPE for use in the manufacture of telecommunication grade optical fibre cables from 7.5% to Nil
*Black Light Unit Module for use in the manufacture of LCD/ LED TV panels from 10% to Nil
*Organic LED (OLED) TV panels from 10% to Nil
*CVD and SAD are being fully exempted on specified raw materials [battery, titanium, palladium wire, eutectic wire, silicone resins and rubbers, solder paste, reed switch, diodes, transistors, capacitors, controllers, coils (steel), tubing (silicone)] for use in the manufacture of pacemakers
*Evacuated Tubes with three layers of solar selective coating for use in the manufacture of solar water heater and system to Nil
*Active Energy Controller (AEC) for use in the manufacture of Renewable Power System (RPS) Inverters to 5%, subject to certification by MNRE
*Parts, components and accessories (falling under any Chapter) for use in the manufacture of tablet computers and their subparts for use in manufacture of parts, components and accessories are being fully exempted from BCD, CVD and SAD
Reduction in SAD to address the problem of CENVAT credit accumulation:
* All goods except populated PCBs, falling under any Chapter of the Customs Tariff, for use in manufacture of ITA bound goods from 4% to Nil
*Inputs for use in the manufacture of LED drivers and MCPCB for LED lights, fixtures and LED lamps from 4% to Nil
Miscellaneous
*Excise duty structure for mobiles handsets including cellular phones is being changed from 1% without CENVAT credit or 6% with CENVAT credit to 1% without CENVAT credit or 12.5% with CENVAT credit
*Excise duty structure of 2% without CENVAT credit or 12.5% with CENVAT credit is being prescribed for tablet computers
*Basic Customs Duty on Digital Still Image Video Camera capable of recording video with minimum resolution of 800x600 pixels, at minimum 23 frames per second, for at least 30 minutes in a single sequence, using the maximum storage (including the expanded) capacity is being reduced to Nil. Basic Customs Duty on parts and components of these cameras is also being reduced from 5% to Nil
*Concessional customs duty structure of Nil Basic Customs Duty, 6% CVD and Nil SAD on specified parts of electrically operated vehicles and hybrid vehicles, presently available upto 31.03.2015, is being extended upto 31.03.2016
Excise duty structure on certain goods is being restructured as follows:
*Wafers for use in the manufacture of integrated circuit (IC) modules for smart cards from 12% to 6%
*Inputs for use in the manufacture of LED drivers and MCPCB for LED lights, fixtures and LED lamps from 12% to 6%
*Mobiles handsets, including cellular phones from 1% without CENVAT credit or 6% with CENVAT credit to 1% without CENVAT credit or 12.5% with CENVAT credit. NCCD of 1% on mobile handsets including cellular phones remains unchanged
*Tablet computers from 12% to 2% without CENVAT credit or 12.5% with CENVAT credit
